Applicability of Section 297

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

07 January 2011 In case of transaction between A Pvt. Ltd. & B Pvt. Ltd where both the companies have common nominee directors. The paid up capital for both the compnaies is also more than Rs. 1 crore and the value of transaction is also more than Rs. 5000 in a year.
Please advise whether Central Government approval is required in pursuance of section 297 of the act?

CS SIDDHARTHA BANIK

CS SIDDHARTHA BANIK (Expert)
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07 January 2011 Hi,

As you have mentioned that both the companies are Pvt. Limited Company(A.Pvt. Limited & B.Pvt. Limited), hence, Sec 297 will not be applicable here.

Thanks,
CS Siddhartha Banik

Querist : Anonymous

Querist : Anonymous (Querist)

07 January 2011 Dear Sir,

Thanks for the response.

Please can you provide a reference of a clarification, notification or a case laws for this opinion. As act only refers to common directors.

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Jayashree S Iyer

Jayashree S Iyer (Expert)
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07 January 2011 Section 297 is very much applicable to transactions between two private companies having common directors.

Here the question is since the common director is a nominee diretor whether the provisions of Section 297 are applicable?

The Act doesn't specify any such exclusion. Hence I feel it's applicable to nominee directors and since the paid up capital is >1 crore CG approval is also required.

Querist : Anonymous

Querist : Anonymous (Querist)

07 January 2011 Thanks mam